Conversation with Hu Dinghe: From Bitcoin to the Metaverse
Editor's note: Since its inception, Bitcoin has had a profound impact on the global digital economy: on the one hand, it has spawned a complex cryptocurrency market; on the other hand, it has spawned an all-encompassing blockchain technology system. They have created new business models and are also “absorbed” by traditional finance and industry. New ecosystems such as the metaverse and AIGC can also be seamlessly connected to them. Scholar Hu Dinghe studied in depth during his visit to Harvard University and wrote “The Time of the Storm on Bitcoin”. Editorial board member Bai Liang of this magazine and Mr. Hu Dinghe had a conversation about the development and future trends of Bitcoin over ten years; at the same time, we have excerpted the chapter “Bitcoin 2022” for the benefit of readers. As stated in the book's introduction, “Bitcoin is an economic phenomenon; it itself is still growing and evolving, and so are the questions and answers.” Bitcoin and the virtual currency market derived from it are still in the early stages of development, and different countries and regions around the world face different regulatory rules. The contents of this book and this conversation are all opinions and family comments, and do not involve any investment suggestions. 01 Bitcoin did not appear by chance Bai Liang: You have studied the development process of Bitcoin since its inception and wrote the book “Meeting Bitcoin in the Wind”. A “turbulent event” means that Bitcoin did not appear by chance, but rather the result of various factors such as society, economy, and technology. What do you think were the conditions that led to the birth of Bitcoin? Was it a coincidence or a necessity? Hu Dinghe: I do believe that the emergence of Bitcoin was not an accident, but an inevitable result of social, economic, and technological factors. From an economic point of view, in 1976, Hayek officially proposed the denationalization of money, believing that only denationalization of money can control the circulation of money and prevent artificial depreciation of the currency. He believes that inflation is caused by the country controlling the amount of currency issued, and is unavoidable, even in Europe and America. In reality, currency issuance in Europe and America is not something that can be decided unilaterally by the government; it also requires various institutions such as the parliament and central bank to play, control, and consult with each other before making a decision. However, Hayek believes that even so, as long as the currency is controlled by the country, it will inevitably be overissued. In fact, the same is true. The amount of British pounds and dollars has increased greatly in the past 100 years, and as a result, they have all depreciated very much. The dollar's purchasing power is probably only about 3.87% of what it was 100 years ago. In terms of technology, Bitcoin is the result of the co-evolution of multiple technologies. In 1981, the hash chain data was continuously complete, and the predecessor of blockchain technology began to appear. In 1982, an untraceable cryptographic online payment system appeared again. In 1991 and 1992, private keys and proof of work mechanisms appeared. In 1998, an experiment with distributed digital currency appeared. In 2001, the SHA256 algorithm, or secure hashing algorithm, appeared. In 2008, after the global financial crisis caused inflation, “Satoshi Nakamoto” sent an email. He believed that in order to solve the inflation caused by the financial crisis, it was necessary to create a decentralized currency, a currency with peer-to-peer payments. This is Bitcoin. He believes that only a currency such as Bitcoin, which has no center, no authority, and no third party guarantees, but can also establish a trustworthy mechanism, can solve the inflation caused by the financial crisis. In my opinion, this is an inevitable result of the development and application of the concept of a market economy to digital currencies. The great Adam Smith founded Market Economics. Theoretically, the production and sale of products are all completed through a completely competitive market. However, in terms of currency, it is still up to the country to control it, issue it by the country, and increase the credit of the authorities. I think in fact, currency is also a special product. Like other products, it can also be distributed and used through market competition, so that everyone can freely choose. If we think that an enterprise or product is completely controlled by a state-owned company, and that it is better to use market competition to do better, then currency may also achieve optimal choices through market competition, bringing maximum benefits to society. Bitcoin is a completely market-based currency, while fiat currency is controlled by the state. Thank you for the interview with me today. It may have been an accumulation. Suddenly I changed my mind and my mind was illuminated: If the market economy may gradually replace the planned economy, why can't market currencies compete with planned currencies (that is, fiat currencies)? Think about how convenient WeChat and Alipay have brought! Competition will inevitably lead to optimization, leading to the maximization of human social welfare. In the spring of 1992, Comrade Xiaoping fearlessly and shockingly proposed a socialist market economy, making a name for a vibrant market economy. Now, can't we realistically think and discuss the issues of market currency and digital currency as reforms deepen? 02 Bitcoin is already difficult to manipulate Bai Liang...
